When my recent posts on the auction of six condos in a new development called m127, at 127 Madison Avenue, generated a record number of page views on my blog, I was struck by an irony.
What hit me – ouch! – was the difference between the number of people who registered to bid for the apartments, which were developed between 30th and 31st streets in Manhattan, and the number of buyers who rush headlong from competition in other purchase situations. To them, the very idea of a bidding “war” is anathema.
But I’ll bet many of these same potential buyers would savor the the chance to bid for properties at an auction. Who knows, maybe even those same wary buyers went to the auction on June 23, attend other auctions and follow auction news assiduously?
The irony, of course, is that the difference between an auction and a competitive bidding situation is virtually nil.
Everyone understandably wants a bargain. What everyone doesn’t appreciate is that the market determines value, whether at an auction or in an offer for a single property through the usual channels. Sometimes the buyer in either situation gets a bargain, sometimes not.
As I have written, auctions tend to create artificial market values as the result of any number of variables such as the number of bidders, the “climate” in the auction room, the skill of the auctioneer, any reserve prices and the real possibility of catching auction fever.
At the same time, offers made in the ordinary way are subject to similar and additional variables, including the negotiating ability of the buyer’s broker.
Either way, the market is the market. And fear of a bidding war is, to my way of thinking, ultimately irrational.
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